Annual raises to remain about 4 percent, survey says

After six years of raises averaging slightly more than 4 percent, it looks like more of the same, according to the annual William M. Mercer Compensation Planning Survey for 1999-2000.

Clearly, double-digit raises died with the 1980s. American workers may be keeping modestly ahead of inflation, but they certainly aren't getting rich by increments, and they shouldn't expect to next year.

The newest Mercer survey found that midsize to large employers nationwide intend once again to give raises averaging between 4 percent and 4.4 percent.

That range, consistent throughout most of the 1990s, continues a compensation shift away from fixed-salary increases to more variable, incentive-based pay, said Jeffrey Fuller, a Mercer compensation consultant.

The most recent numbers available from the U.S. Bureau of Labor Statistics showed that working urban Americans experienced an inflation rate of 1.9 percent for the 12 months ending in June. Because the annual inflation rate has hovered around 2 percent or 3 percent through most of the 1990s, most workers have been realizing real annual income gains, though small.

The Mercer salary survey covered 2,000 employers with 13.9 million employees, or 13 percent of the nation's private-sector work force.

Complete survey details won't be released until later this year; meanwhile, organizations use such preliminary information as a barometer for salary decisions.

As in recent years, Fuller said the raise stagnation at 4 percent puzzled economists who would expect salaries to rise higher in response to the continued low unemployment rate.

Fuller said employers were holding the line on fixed compensation, probably in an effort to maintain earnings growth and avoid price increases on goods and services.

This year's survey outlook found that, since 1996, half the employers surveyed had increased the number of employees eligible for some kind of incentive pay. That means employers are more likely to give pay increases that reward performance rather than give annual raises as a matter of course.

The 1999-2000 survey also echoes past years' findings that executive raises are likely to be slightly higher than everyone else's.

Executive salaries are expected to rise 4.4 percent to 4.5 percent, compared with 4.2 percent for managers, professionals and technical workers, 4.1 percent for non-exempt workers who are eligible for overtime pay and 3.9 percent to 4 percent for non-union hourly employees.